Have I triggered the MPAA?

nkb21

Im fairly confident, based primarily on the text in italics below from my pension administrators, that I havent triggered the MPAA (£4k or £10k?), but Id be grateful for a view from those pension specialists in the community, as to whether they agree. The reason I have a slight doubt is that my pension administrators havent been entirely reliable with info theyve provided me on other aspects to date!! Ive had a look at various sources of information on the net but my particular scenario is not covered specifically………

A couple of years ago (aged 51), I was made redundant and due to personal family situations at the time, I took the opportunity to take early retirement on an unreduced pension. Id worked for the same company for c.30 years and built up c.27 years of DB benefits, and then when they closed the DB scheme, I spent the next 3 years building up a DC pot. When I took my pension, I elected to take the 25% TFLS which equated to c.£170k. This was made up of my entire 3 year DC pot (c.£40k) with the rest coming from my accrued DB benefits.

My only current income is now my DB pension (c.£25k p.a before tax).

Im considering going back to work on a salary that, when including my DB pension, would move me way into the HR tax payer bracket so I’d be looking to use Salary Sacrifice to move whatever I could into a pension, to get my new taxable income figure, ideally below, but if not, as close as I can, to the £50k HR tax threshold.

I have an email from my current pension administrators which states “as you did not take flexible retirement with the XXXX pension scheme, we are not aware of you being affected by the Money Purchase Annual Allowance (MPAA). However, if you have taken flexible retirement outside of the Scheme (which I havent), you may be subject to the MPAA”.

Based on the above scenario of how I took my pension a couple of years ago, do you agree that I am still eligible to utilise the ”100% of salary or £40k annual allowance, whichever is less” criteria to contribute to a pension or do you think Im bound by the £4k MPAA max figure now?

Mnd

I think DB pensions don't affect MPAA. Apologies if I'm incorrect

nkb21

Thanks Mnd. My concern though, was the fact that I had taken the entire DC pot too, albeit as part of my TFLS

Malthusian

As you say it was a TFLS which isn't a "trigger event". Nor is taking a DB pension. The scheme administrators are right.

drumtochty

The MPAA came in to operation 6 April 2015. Did you take the money out the DC pot prior to that date. If so the MPAA does not apply.


It does not apply for a small pot lump sum but you say the figure was £40K and if that was after April 2015 lights are starting to flash.


I did this in 2010 and what happened to me was that my AVC fund was transferred to my work DB scheme. Therefore my AVC was closed and the money went into the DB scheme.


As technically I no longer had that AVC fund, the money was then part of the defined benifit scheme and taking money out of a Defined Benifit scheme does not trigger the MPAA.


You would want to double check the AVC was closed prior to you taking the lump sum from the defined benifit scheme unless the whole thing happened prior to April 6 2015.



If your company did the same thing then the worry about the AVC possibly being treated as a DC scheme is no longer the case as the AVC would be closed before the Defined benifit paid out your lump sum.

nkb21

Thanks all. Yes, my pension commenced payment in Dec 2017 so after MPAA was introduced.

Best I contact my pension administrators to check how they disposed of the funds in the DC pot.